Crypto can be a driver for racial equity
A cryptocurrency is like digital money based on cryptography, which is really just complicated math. It does not have a physical existence and is not issued by a government, although you can buy them directly with US dollars or other national currencies.
For those who are excluded from the traditional financial system, cryptocurrencies offer a new opportunity to create wealth and participate fully in the American economy. While it’s clear they’re driving mainstream adoption, there’s a lot of speculation as to why blacks and Latinos are so interested and involved in the crypto industry, which includes the bitcoin, the first cryptocurrency, and thousands more.
Working outside the “system”
Many of those most involved are millennials, small business owners, and even black professionals like me with advanced college degrees and six-figure incomes. We have been locked out of loans and investment opportunities – including mortgages and high-growth assets – that our white contemporaries use to create wealth.
Many more have also been left out, including an estimated 55 million Americans who don’t have a bank account or don’t have easy access to banking services. And millions more — whites, blacks, Latinos, and rural Indigenous people — don’t have the employment records, credit history, or official documents needed to qualify for banking services.
Inequalities don’t just apply to people. For years, black churches have deposited huge sums of money in banks that have historically refused them loans. Government efforts, like the Paycheck Protection Program during the COVID-19 pandemic, have been touted as boosting minority businesses, independent contractors and the self-employed. Instead, they ended up benefiting hedge funds and big corporations.
In cryptocurrencies, there are significant new opportunities outside of this traditional financial system, free of barriers such as minimum balances and lots of red tape. They are not without risk, of course, but I believe those who dismiss cryptocurrencies as too risky ignore their benefits and unfairly downplay the risks of their preferred alternative, the stock market.
Meet the people who got results
By using cryptocurrencies, I found a way to change the world for others and for myself. In 2013, while serving in the Obama administration promoting economic development, a friend introduced me to bitcoin. I took the leap in 2016, and the ROI from my early crypto purchases allowed me to transition into a full-time blockchain career in early 2017.
I continue to buy cryptocurrency and have acquired digital assets that can be used as art, commemorative keepsakes, or for other creative purposes, which are collectively referred to as “non-fungible tokens,” also referred to as NFTs. I focus my investments on the works of black and Latino creators, but NFTs are driving growth in the creative industries in America.
What motivates me, however, is the vision outlined in the 2008 bitcoin white paper, of an open financial system tackling the deep-rooted problems of centralized finance.
I am far from alone in seeing promise in this new territory.
“By using cryptocurrencies, I found a way to change the world for others and for myself.”
Justin Rhedrick is a millennial, father, and formerly incarcerated in the North Carolina prison system who credits bitcoin with transforming his life. After his release from prison, a friend told him about cryptocurrency. Rhedrick found it easy to start investing on his own, without a lot of money. At that time, a bitcoin was worth around $600. He started to learn financial principles and practices and got returns as the value of a bitcoin increased; now one is worth around $40,000. In 2021 he published a book, “From Bars to Bitcoin”, and teaches young black men how to invest in cryptocurrencies and pursue entrepreneurship.
In 2020, Brenda Gentry, a 46-year-old black mother in San Antonio, started investing in cryptocurrencies during the COVID-19 lockdown. Gentry had worked as a mortgage underwriter, earning $75,000 a year – but she now earns $40,000 to $80,000 a month advising investors in NFTs and the new field of decentralized finance, an alternative method of lending where funding comes from individuals rather than banks.
Even for those not looking to invest, cryptocurrencies offer an option to send money cheaply and securely to family overseas in minutes. It’s not yet a mainstream option, but observers see opportunities for more efficient money transfers, even in places affected by war or natural disasters. It is also possible that workers will be paid in stablecoins, which are cryptocurrencies pegged to the value of a defined asset like the US dollar.
Beyond individual benefits, cryptocurrency can help build power at the movement level. In 2017, Tavonia Evans, a Black Gen-X entrepreneur and mother of eight, decided the Buy Black movement needed its own currency. So she built one – a complex undertaking that requires technological prowess and expertise. Today, its digital currency, Guapcoin, has over 10,000 users and helps black customers and businesses take control of their financial futures through cryptocurrency.
Cleve Mesidor (@cmesi) is a Web3 Expert who has been in the cryptocurrency business for six years. She is an advisor to the Blockchain Association and leads the National Policy Network of Women of Color in Blockchain.